What business owners must do to ensure they don’t have a tax debt at the end of the financial year.
As a business owner, there are several steps you can take to manage your money effectively and minimise the risk of having a tax debt at the end of the financial year.
Here are some tips on how to do this:
1. MAINTAIN ACCURATE FINANCIAL RECORDS
Keep detailed records of all your business transactions, including sales, expenses, invoices, receipts, and bank statements. Accurate record-keeping is crucial for preparing your tax returns correctly and minimising errors.
2. SEPARATE PERSONAL AND BUSINESS FINANCES
Establish separate bank accounts for your personal and business finances. This separation will help you track your business income and expenses more effectively, making it easier to calculate your tax obligations accurately.
3. TRACK AND CATEGORISE EXPENSES
Categorise your business expenses properly to ensure you claim all eligible deductions. Common expense categories include office supplies, rent, utilities, travel, marketing, and employee salaries. Consider using accounting software or tools to streamline expense tracking and categorisation.
4. PLAN FOR ESTIMATED TAX PAYMENTS
Depending on your jurisdiction, you may be required to make estimated tax payments throughout the year. Estimate your tax liability and make timely payments to avoid penalties and interest charges. Consult with a tax professional or accountant to determine the appropriate amount to set aside for estimated taxes.
5. UNDERSTAND DEDUCTIBLE EXPENSES
Familiarise yourself with the tax deductions and credits available to your business. Deductible expenses can include equipment purchases, professional services fees, training costs, and business-related travel expenses. Keep receipts and documentation to support your deductions.
6. SEEK PROFESSIONAL ADVICE
Consult with a tax professional or accountant who specialises in small business taxation. They can help you understand the tax laws specific to your industry and provide guidance on maximising deductions while staying compliant.
7. USE TAX PLANNING STRATEGIES
Explore tax planning strategies that can help you minimise your tax liability. For example, you may consider deferring income or accelerating expenses into the current financial year, where appropriate. Again, it’s essential to work with a tax professional to ensure you’re utilising these strategies correctly and legally.
8. BUDGET AND SAVE FOR TAXES
Create a budget that includes setting aside funds specifically for taxes. By saving for taxes throughout the year, you’ll have the necessary funds available when it’s time to make payments, reducing the risk of a tax debt.
Remember, while these steps can help you manage your money and minimise tax debt, it’s crucial to consult with a qualified tax professional who can provide personalised advice based on your specific circumstances and the tax laws applicable to your jurisdiction.
At Financial Management 101 – we are committed to providing YOU with excellent financial education, training and support so that you can live the life you truly desire. Join our LEARNING HUB today!
What are 3 ways to change your poor money habits into good money habits?
Changing poor money habits into good money habits is essential for financial stability and success. Here are three effective ways to achieve this transformation:
1. Create a Budget and Stick to It
Developing a budget is the foundation for managing your money effectively. Start by tracking your income and expenses to get a clear picture of your financial situation. Categorise your spending and identify areas where you can cut back or make adjustments. Set realistic financial goals and allocate a portion of your income towards savings and investments. Regularly review your budget and make necessary adjustments. By sticking to your budget, you’ll develop discipline and make conscious spending decisions, which will help you break poor money habits.
2. Set Up an Emergency Fund
One of the reasons people fall into poor money habits is the lack of an emergency fund. Unexpected expenses or emergencies can derail your financial progress and lead to debt or poor financial choices. Establishing an emergency fund acts as a safety net, providing financial security and reducing the need to rely on credit or loans. Aim to save three to six months’ worth of living expenses in an easily accessible account. Start small, automate regular contributions, and gradually increase the amount over time. An emergency fund will help you break the cycle of poor money habits by providing a financial buffer.
3. Educate Yourself About Personal Finance
Improving your financial literacy is crucial for developing good money habits. Invest time in learning about personal finance concepts such as budgeting, saving, investing, and debt management. Read books, follow reputable financial websites, and listen to podcasts or watch videos that provide valuable insights into money management. Understand the principles of compounding, diversification, and risk management to make informed decisions. By educating yourself, you’ll gain the knowledge and confidence necessary to change poor money habits into good ones.
Remember, changing money habits takes time and consistent effort. Stay committed, seek support from friends or family members, and celebrate small wins along the way.
At Financial Management 101 – we are committed to providing YOU with excellent financial education, training and support so that you can live the life you truly desire. Join our LEARNING HUB today!
Yes, I believe there is, otherwise everybody would be living without financial stress and having no money problems at all.
But that’s not the case, so there must be a secret?
What is the secret to financial health?
Well, let me explain more what the term financial health means.
Having financial health is about having the money to enjoy things you love.
It means having money work to your advantage and not just to your bank or financial institutions benefit!
AND…… it certainly means not having any financial worries or stress relating to money.
What you were taught or brought up to believe about money, has shaped you today.
This means the difference between having awesome financial health where you’re able to pay your bills, have money in the bank and live without financial stress.
Or, living from pay check to pay check stressed out and worried that if something happens like loosing your income, you could be in some financial strife.
Here are seven ways to know if you are in good financial shape and have awesome financial health.
1 Firstly, you don’t spend every dollar you earn, but have money left at the end of pay day
2 Secondly, you have a savings account with money it and ready for “just in case” emergencies like loosing your job.
3 Thirdly you’re able to pay more than your minimum mortgage repayments and you are well on your well to paying this sucker down before the end of your loan term.
4 Fourthly, you are paying your bills on time and before the due date
5 Fifth, at the end of each month you have a zero balance on any credit cards
6 Sixth, have money regularly put into an investment portfolio, whether it be for shares, managed funds or for property investment for example, and
7 Lastly, annual holidays are saved up and paid in full before heading away.
Making sure you work towards good financial health will mean the difference between living a very comfortable and happy life during your retirement years OR relying on government support living in poverty.
So do you feel you have awesome Financial Health? No, then time to do something about it don’t you think?
What I offer is a full coaching service that’s super affordable while you get the support, knowledge and help you require to make better financial decisions.
If money stress is causing you problems then check out how you can work with me below.
This blog is dedicated to my mentor and serial entrepreneur Mr Harry Bozin, who has taught me everything I know about paying down the biggest debt one will ever have THE MORTGAGE and in the quickest way possible.
Whenever I share anything about how to pay your mortgage down as quickly as possible, take note and put into action the strategies and tips I share that truly work.
So, one of the major purchases individuals and couples in their lifetime take on, is when they decide to put a deposit down to buy their very own piece of paradise.
Having a mortgage is one of the biggest debts most people embark on when owning a home.
It can be one of the most stressful and worrying times in their life, often concerned how they’ll make the monthly mortgage repayments when unexpected events come up.
What a lot of people aren’t aware of when borrowing the money to buy their home, is the overall cost for paying down this debt if they don’t pay it down as quickly as possible.
Because the first 10 years of the term of the loan whether it be a 25 or 30 year loan, is paid in interest payments to their banking institution. During this time there isn’t a lot of principal paid off (the original amount borrowed) as most of it goes to paying interest payments, unless the new home owner is consciously paying extra into their home loan.
Do you know what the total cost of your mortgage is if you do not pay it down well before the end of the term of the loan?
Well, I do and it may shock you to know that on a 25 year home loan borrowing an amount of say $350,000 not paid before the 25 year mark, will end up seeing you pay an additional $236,624 for the privilege of having a home loan.
Now that’s $236,624 better in your pocket earning you money, not the banks.
Let’s look at some rough numbers on how you could grow this money of $236,624 where it would compound over the next 15 years (because that’s the time period you saved on your mortgage by paying it down in 10 years).
You could put an additional $263,529 into your pocket seeing you at the end of 15 years your initial $236,624 growing to an enormous amount of $500,153.
Now that’s how having your money work for you and not your banking institutions benefit!
So what are some of the ways you can pay this debt down as quickly as possible and be mortgage free in 10 year or less?
There are 5 steps to becoming mortgage free faster and they are:
1 SET YOUR GOAL
It’s sounds crazy for some people to set a goal for this given they generally feel overwhelmed at the amount of money to be paid back, but it can be done.
This goal is just like any other you would set.
Let’s say for example that you have a $350,000 mortgage and would like to pay this off around the 10 year mark not 25 years as per the term of your loan agreement.
Then what you would do is look at ways you could do this by looking at your spending habits and talking to your mortgage specialist to find out whether your home loan is one that will enable you to pay it down without any penalties.
2 GET A COACH
There are two coaches you will need to ensure you stay on track and on target of paying your mortgage down within 10 years and the first is a financial coach like me.
A FINANCIAL COACH is critical to keeping you focussed on your goal and guide you in making sure you’re staying on track to paying your home loan goal down in the 10 year time frame you’ve set.
The goal of the financial coach is to ensure that every bit of extra money you have, goes towards paying this debt down as fast as possible.
A financial coach is not only there for financial encouragement, but is also there for your emotional wellbeing, when at times you may feel overwhelmed and stray off course thinking you’re never going to pay this down.
The second coach is A MORTGAGE COACH. Now the major benefit of a mortgage coach is to ensure that you have the most effective home loan for you that’s working in meeting your goal of becoming debt-free in 10 years or less.
A good mortgage coach would meet with you once or twice a year to ensure that your loan meets your current life circumstances, because as we know home loans change.
A mortgage coach will be able to advise whether you are best taking advantages of lower interest rates and whether you could fix that interest rate to maximise your debt reduction strategy.
3 LEARN HOW AND WHAT YOU CAN DO TO ACHIEVE YOUR GOAL OF BECOMING DEBT-FREE SOONER.
There are many strategies about how to pay your home loan down faster and I’m afraid to say that it’s not in the banking institutions’ best interests to share with you how to pay your debt down faster.
Why, because they have forecasted what they are going to do with your extra repayments right up to the 25-year mark. So you see they want you to keep paying so they can use your hard-earned money on other investment opportunities to help grow shareholder dividend returns.
This is why working with both your financial coach and mortgage coach will see you taking advantage of strategies that you may not be aware of yet.
4 CREATE A PLAN AND STICK TO IT!
With anything in life, when you have a plan and stick to it, you have a better chance of achieving what you’ve set out.
This is where your financial coach can help create a plan that meets your requirements and lifestyle. You see we all have different priorities in life so the plan needs to be tailored to suit our own circumstances.
5 TAKE ACTION. DO WHAT OTHERS WON’T DO AND YOU WILL SEE THE BENEFITS OF BECOMING DEBT FREE SOONER.
One of the best ways to become mortgage free is do what others aren’t prepared to do.
So often we follow the herd mentality and that sees us continuing to be poor and broke.
It’s about stepping out of our comfort zone for a short period of time while the adjustments are being made and then reaping the benefits long term.
When someone has the courage to step out and become their own person and do the things others aren’t prepared to do, then they soon become the ones who are debt free, happier and living life the way they’ve always dreamed.
So let’s recap what it may costing you by not getting a coach.
Firstly, you’ve seen that you are paying out good money that you’ve worked long and hard to the banking institutions for longer than you need to.
And secondly, your hard-earned money could be working for you and not your banks, as you’ve seen in the illustration above on the benefits of compound interest, making you richer not them.
Also, you’ve read about the benefits of getting yourself both a financial and mortgage coach and this enables you to become mortgage-free sooner
** As your financial coach, I’m one that works with you regularly to help you stay focussed and on track to achieving your financial goals. As your coach, I am also here to ensure that when life suddenly throws you a curveball as it often does – you have the tools and resources necessary to stay motivated and on track.
** The mortgage coach is the one that ensures your home loan is structured and set up correctly. Utilising the latest strategies available to maximise the full debt reduction potential. The mortgage coach’s responsibility is to ensure they are working with you to understand your home loan so you can work towards paying it down as quickly as possible.
NEXT STEPS:
Financial Coach – get in touch with me today to see how I can show you how to pay your mortgage down in half the time while supporting you in achieving your financial goals sooner.
If you’ve recently lost your job or you feel you’re about to, here are some things you can do right now to make sure you survive during the uncertain weeks or months ahead.
Okay so you need cash and you need to earn it fast.
There are 3 basic things you need to make sure you have secured during this rough uncertain and unpredictable time and that is:
Make sure you have food on the table for you and your family.
You have shelter. A roof over your head to weather out this nasty health disaster.
Protect your mental health and wellbeing.
Here are 5 ways to make sure you’re going to survive;
1If you have a mortgage broker now is the time to make contact with them if they haven’t already got in touch with you to discuss your home loan options.
If you feel you don’t have someone who you can trust in this area then I’ll drop you the name of a broker who is loyal, trustworthy and has the homeowner’s best interests at the forefront.
A point to note is that I don’t have any affiliation with this company, nor do I receive any kickbacks. I’ve just known them for a very long time and they’ve shared many tips with me to help my clients pay down their home loan debt as fast as possible, all without any strings attached.
2 If you’re not comfortable talking with a mortgage broker then get on the phone with your bank or lending institution and negotiate a deal that sees you freezing your monthly mortgage payments for the next couple of months.
What the bank will do in most cases is hold of taking payments for a short period of time, or they may even negotiate with you just paying interest-only payments.
Once this storm has passed, they will get you making small additional payments on top of your regular mortgage payments, once things go back to the “new normal” and you’re earning an income again.
3 Get in touch with your credit card provider and see what they can do for you to hold off making any monthly credit card payments. There may be something they can do to stop the cash bleed going towards paying your debts while your cash is in short supply.
4 If you’re renting then get on the phone and talk to your landlord to see what they will do to help take the strain of worrying about how you can afford to keep the roof over your head.
Most cases they are going to be in the same situation, worried that if you move out how will they afford to keep up their ongoing mortgage commitments on the property you’re living in. It’ll be up to them to negotiate with the bank to see what they can do on the other side to hold off future mortgage payments until things become a little more financial.
5 Now you’ve made contact with your bank or lending institution, next you have to see where you can find some cash or get some part-time work to make sure you survive during this traumatic time.
With the coronavirus pandemic impacting almost every business, some entrepreneurs are thriving and looking at ways to support their employees during this difficult time.
There are some industries that are still hiring and in fact looking to increase their staffing requirements because they’re in areas where they are in high demand during this time.
Supermarkets are one example as soon as they stack the shelves they are empty again. Some of the areas they are hiring and looking for are packers, bakers, customer service staff – check your supermarket’s website to see what they need.
Fast food deliveries have seen an increase in demand due to self isolation requirements and companies like Uber eats have seen an increase where they are looking for more drivers.
There’s a job board I discovered this week called Jora which is an Australian based search engine for jobs. Unlike traditional job boards, individuals can search through thousands of career opportunities, all sourced from many job sites from around Australia.
They list updates every 24 hours with new job opportunities. The site even breaks it down into job type, salary, location and job titles. Go check out it.
Here’s the link to Jora Australia just click on it and see if there’s something for you.
Other ways to get extra cash is;
You could look around the house to see what’s cluttering your home that you could sell online.
Or if you’re crafty and creative, how about sell your stuff online at sites like Etsy.
What about if you’re a cafe owner who a person who can bake. Why not teach someone how to decorate cupcakes, or another favourite baking item of yours and get paid for it by setting up a class online. People are basically in isolation looking for new creative ways to fill in their time.
You could also look to partaking in online surveys or focus groups and get paid to give your opinion.
Another is to sell your expertise online, whether you’re a tutor, teacher or have an expertise that you could share or teach online and get paid for it.
Why not look at some freelance work at sites like Fiverr, Upwork, Craigslist to name a few. Check out these sites as there may be something you’re good at and get paid for.
Affiliate marketing is another way, if you have a blog or website, you could get paid for advertising someone’s business on your site.
6 Okay next look to see where you can cut all unnecessary costs.
Go through your bank statement and see what you’re spending your money on.
What subscriptions do you have that you can go without for a while that will save you any money big or small?
I recently did this exercise as I often have things I’ve subscribed to that I don’t use any more. So because I hate giving good money away, I cut about 4 subscriptions and put $80 back in my pocket per month.
One of these was to suspend my audible account for the next 90 days as I have enough books in my library to keep me going for a year.
It may not sound like much but saving $50 or $100 will make the difference when you need to put food on the table or keep the roof over your head.
If you’ve got an iPhone go through the settings tab on your phone and check out your apple account to see what subscriptions have slipped through the cracks.
Gym membership is a big one at the moment because you can’t go out so why not suspend or cancel it if you can.
What streaming providers do you need? Do you need everyone that’s on offer at the moment like Foxtel, Netflix, Stan, Disney or even Amazon Prime to name the ones off the top of my head?
Maybe decide on one or two and cancel the rest. Wherever you can save a few dollars do it.
You’ve got to be ruthless and tough. Just as I am sitting here writing this our daughter came in wanting to buy an online game for her iPad.
It may have been only $5 and she said I’ll use my own money. That’s fine but as I said to her do you really need it right now and why not see if you can save that money for a bit longer to can go without for the next month before you decide to shell out your pocket money.
If we can teach our kids now the importance of saving, when a time like this comes up in THEIR working life, they’ll have the skills to knuckle down and not spend on non-essentials.
Now is the time to teach your kids about the value of money and how looking after the cents will amount to huge amounts of dollars later in life.
Look at what you’re spending your money on and see where you can cut down on things.
Sadly, most don’t have 6 – 8 months worth of emergency money so look at ways to get some dollars in the door fast.
You’ll need to make sure you have about 90 days worth of money to see you through.
Your job right now is to get a job if you’re not working and bring in some money to take the pressure off.
This will help keep your spirits high and look after your mental well being and health.
There is nothing more stressful than financial worry and pressure, so do what you can and see if any one of the suggestions I’ve offered above helps you out.
If you need emotional support or looking for more information on how to take the financial pressure off, then join my FB Group where I will be here for anyone needing an ear, as well as, sharing more tips and information.
I look forward to hearing from you.
In the meantime stay safe and healthy.
Reference: Mortgage Broker – Harry Bozin CLICK HERE for more info.
I talk a lot about building financial muscle and for good reason.
Why? Because some people today still don’t have their money working for them and they’re making dumb decisions when it comes to managing it effectively.
My concern is that when these people decide around 65 – 70 years of age that they would like to retire – they’re going to struggle!
Why, because they’re going to have nothing to enjoy their retirement years with, as they’ve spent everything they’ve earned along the way.
Financial muscle as I bang on about constantly, is making sure firstly that you’re hard earned money is working for you and not your bank’s.
And secondly, it’s about having something put away for “just in case” which “just in case” comes up a fair bit during our lifetime.
So how nice would it be to know that you’ve got money and it’s working to your advantage when you need it.
Here are 7 steps you need to know when it comes to building financial muscle and they are:
1 Looking at your spending habits. What are you spending your money on each and every payday? Are you spending it on things that are worthless and while short term makes you feel good initially but then when it comes to paying your bills you haven’t anything left to pay for them?
My guess is, this is when you start to feel stressed out and your life becomes very overwhelming.
The quickest and easiest way to get a handle on what you’re spending is to look at doing a budget. For the first month, you write down everything you spend and then deduct what you earn by what you’ve spent for the month.
More often than not, you’ve used credit to help get you out of a bind, but it’s not working and you’re getting further and further into debt.
2 Next, once you’ve worked out if there’s any surplus, you’ll want to make some adjustments in your spending to put away a small percentage around 10% of what you earn into a savings account.
Now 10% is not a lot of money, but you’ll need to do this first at payday before you pay any bills or use some of your income on other expenditure.
Once you’ve put away 10% or even $20 or $30 into a savings account then put on autopilot, where every payday money goes from your pay into this account. I guarantee you’ll start to think about your money a little differently.
Something magical happens when you know you have some money saved and you start to feel a little more confident and less stressed and it gives you a greater sense of security.
3 Ok the third area where you’ve got to be strict with yourself is to open another savings account, one that is too hard to get access to and start building on your emergency fund.
You’ll need to get your emergency fund up to at least $2000 as quickly as possible.
There are many ways to get this account up to $2000 and the first is to look around your home. What could you sell online that’s sitting around in your garage or shed that’s gathering dust?
The emergency fund is the 3rd most critical aspect to building financial muscle because it takes the pressure off you and your money when those unexpected things arise like your hot water goes on the blink or your fridge packs up.
The emergency fund is for exactly that emergencies that make life very difficult if they’re not fixed or replaced.
Ideally, the emergency fund needs to be at a balance where if you lost your job or you couldn’t work for 6 months, you would have enough money to be able to pay your bills until you get back to working again.
4 The major stress for most people is their ever-increasing debt, whether it be from overspending on credit or the mortgage on your home.
I can’t stress enough that when you finally become debt-free life is going to be a whole lot more fun. Things that used to stress you out are suddenly gone and all the pressure of working at a job that you probably don’t like now gives you the power and choice to look at whether you continue working there.
If you’re not working to pay down all your debts as fast as you can – you’re just throwing away good money to the banking institutions that are funding your poor money habits and making them richer while you become poorer.
Map out who you owe, how much you owe and then start with one debt at a time and pay that down until it’s gone. Once the first debt has been eliminated, then use the money that you paid the debt down with to double up on the next debt.
5 Ok, so the next step in building financial muscle is to stop and do a quick financial health check.
A financial health check will look at quite simply if there are any areas within your money that you need to work on, or get more information on, to get you back on track and retiring comfortably.
I have a 5 min financial health check that you can download HERE to get you started.
6 Now you’ve got money being saved, your debts are being paid off, it’s now time to look at your wealth-building strategies.
Your wealth-building will consist of two parts:
Investing and
Protecting
Let’s talk about investing first.
Investing is about growing your money through facilities like superannuation and other investment options.
Superannuation is a way of saving for retirement.
Essentially your employer in Australia is putting away a percentage of your salary into a fund of your choice that invests the money until you retire.
It’s a forced type of saving but brilliant to help those in particular that are not good at saving and will see you have some money at the end of your working life.
This is a big topic that’s too big to cover off in this post, so I will write a post on this and explain in more detail shortly, so keep an eye out for it.
Other investment options for wealth building during your working years could consist of investing in shares, managed funds or property to name a few.
I would encourage anyone looking into wealth building to seek a financial adviser who is qualified to provide advice on what assets or which investment vehicle is best for you and your personal circumstances.
There are many out there so be careful and take the time to ensure they have your best interest at the forefront of their advice giving.
Next, I want to talk about protecting your money. This is a very important topic. Today, I’ll give you a brief summary but like the topic on superannuation, I’ll be writing more about this in another post.
But for now, let me explain why it’s important to have a Will or good Estate Plan.
A Will and Estate Plan are there to make sure your wishes at the end of your life are carried out and distributed properly.
A Will is a legal document that states what you would like to happen with your assets when you die and forms part of your Estate Plan.
An Estate Plan, on the other hand, records exactly what you would like to happen with your assets upon death and includes documents such as your Will, a testamentary trust, superannuation assets and may contain powers of attorney or other such documents that in the event of you being unable to make decisions, someone appointed by you will act on your behalf.
So as you can see from the brief descriptions above it is extremely important to make sure you are protecting what you’ve worked long and hard to build.
If you die without making a Will it means you die intestate and this causes a lot of heartache and headache for your loved ones left behind.
What actually happens here is that your estate is left to deal with either from the Supreme or Highest Court, depending on which state you live in Australia, who will appoint an administrator.
The administrator’s job is to arrange the funeral and distribute any leftover assets after paying any debts and taxes. Sometimes there are fees associated with an administrator taking care of your details which means your loved ones may not receive the full inheritance you had planned on leaving them.
So make sure you have a current Will your priority today because nobody knows when our time is up.
7 And lastly, the 7th step to building financial muscle is to get yourself ongoing financial education and support.
Just like a sporting team, they all use coaches to help them and guide them to their sporting greatness.
Financial coaching is much the same, an experienced coach who knows sound financial education can make the difference between living with financial stress or living your life the way you’ve always desired – happy and stress-free.
If you’ve read to the bottom of this and you’ve followed the steps outlined above then congratulations as you are one who is committed to living a financially comfortable life.
Why not continue with your financial education by working with me on a monthly basis.
I offer several options, but the first is the most preferred as it’s inexpensive and extremely supportive towards you achieving awesome financial health.
